Businesses were happy to hear that the ineffective Job Creation Incentive Program announced as part of last year’s fall budget was scrapped. But are they any happier with the stimulus package that took its place?
Last Thursday, the NDP presented its budget, dubbed the Alberta Jobs Plan, which as the title suggests hoped to set the stage for renewed economic growth with a two-year $250 million jobs, investment and diversification package.
This stimulus package saw the government introduce two new tax credits – one to reward investment in small- and medium-sized business, another to support the first time acquisition of new and used property in manufacturing and processing, value-added agriculture, tourism infrastructure and culture industries.
It also set aside $35 million to attract and support new businesses and pursue regional economic development initiatives, $25 million for early stage clean technology, and another $25 million in apprenticeship and training initiatives.
As promised, the small business tax rate was reduced from three per cent to two per cent. This will take effect on Jan. 1, 2017, tying Alberta as the second lowest provincial small business tax rate.
The rate cut is being touted as a way to help small business deal with the higher cost of carbon.
Although encouraged by the reduction – “It’s something,” she said – St. Albert Chamber of Commerce CEO Lynda Moffat doesn’t believe the small business tax cut is enough to offset the cost of the new carbon levy.
Last week, Alberta Chamber of Commerce issued a statement saying just that.
“For the vast majority in this economy who are making little profits or breaking even, their costs will go up and they’ll receive no benefit. A business making $10,000 profit this year would save a hundred dollars in taxes. That wouldn’t even cover their first utility bill,” reads the statement by Ken Kobly, ACC president.
It’s a hard pill to swallow for a business community that has been hit with increased costs through a minimum wage hike and reduced profits by a faltering economy.
“Everybody realizes the environmental responsibility that business has, it’s just a very bad time to be hitting them with something that is going to be costing them more money,” she said.
Moffat was encouraged by Monday’s announcement outlining the broad details of the government’s new Alberta Investor Tax Credit.
The 30 per cent tax credit will see $90 million set aside for investors choosing to provide capital to local small- and medium-sized enterprises in the information, clean technology, health technology, interactive digital media and game products, and post-production visual effects and digital animation sectors.
These are sectors, the government says, that often face challenges acquiring capital to develop their businesses, especially in the early development stages.
Minister of Economic Trade and Development Darren Bilous said the program would encourage investors to look beyond energy to non-trade sectors.
They are also sectors St. Albert has been looking to in terms of business attraction.
“There’s a lot going on right now to build that cluster,” said Moffat, “particularly with the Smart City Master Plan.”
The parameters of the program, such as the maximum investment amount to qualify for a credit, will be rolled out in the fall, after the government holds a round of consultation with business owners.
Dar Schwanbeck, managing director of the Alberta Northern Business Incubator, is a little more skeptical of the incentive program, saying that the bulk of tech jobs are involved in the actual manufacturing of a physical product and that these are unlikely to remain within Alberta.
“Most of that goes to tech clusters,” he said, often overseas.
What Schwanbeck hoped to see was more investment in existing local businesses.
He is excited to see what the NDP has in store for the $10 million set aside to support entrepreneurs and small or medium-sized enterprises’ commercialization efforts.
“The program remains to be defined,” he said. But NABI has put forward a strategy that would see investment in human growth capital – coaching for small business owners and entrepreneurs to explore further growth opportunities – that it hopes the government will pick up.